Ministers and Assistant Ministers for the Department of Industry, Innovation and Science

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Interview with 3AW Drive

Subject: Turnbull Government support to secure jobs in Portland community;

E&OE

TOM ELLIOTT:

Joining us on the line now, he's now the Health Minister but until very recently he was the federal Industry Minister, Greg Hunt. Mr Hunt, good afternoon.

GREG HUNT:

And good afternoon, Tom.

TOM ELLIOTT:

You're a member of a free market loving Liberal Government. Why have you decided to bail out Alcoa?

GREG HUNT:

Well I think what we had was a unique situation here, and that was a power outage. So a failure of the system, a failure of the infrastructure, and that had an impact on a private sector operator.

So as a national government, as an Australian government, we have focussed on the restart, we've committed $30 million to the restart. That would, by the way, save far more than would otherwise have been expended if people stopped paying tax and they had to receive unemployment benefits.

TOM ELLIOTT:

But you can make the same argument about, well, the motor industry, you know, Holden, Toyota and Ford, that if we'd kept subsidising them they would've kept employing people, the taxes they would've paid would've exceeded the subsidy.

And yet, a decision was made by the Government, of which you are a part, to not continue those subsidies three years ago.

GREG HUNT:

Well no, that's not correct.

There was no change in the ongoing programs, it was just the fact that those firms were not competitive and two of them had decided before the change of government, shortly afterwards, that there wasn't going to be car manufacturing in Australia. There was no saving that.

TOM ELLIOTT:

Wait a minute, when you're saying they're not competitive, I mean, Alcoa is not competitive without government subsidies.

Without a government subsidy Alcoa never would've set up the Portland Aluminium Smelter in the first place.

GREG HUNT:

I think what we've seen here is 2000 jobs saved today. We've contributed $30 million for the restart to deal with what basically was a failure of the electricity grid which led to the freezing of the pots, or basically the smelting operation to more than two-thirds of the capacity.

It would've been a devastating Detroit impact on Portland and the South West.

In the end, that will save the Government and the taxpayer money, but much more importantly it will go to creating long-term opportunities in the Portland region.

It goes to protecting families, it gives the region a chance of a long-term future, so that's why we've done what we've done, but there was (inaudible) single over-riding event.

TOM ELLIOTT:

Okay, but how will you decide now going forward though what types of firms to bail out and what firms to not bail out?

I mean, for example we depend on power obviously here at 3AW, with no electricity we'd go off the air. If our power supply were interrupted and we went off air for, say, a week, which would cost a lot of money, could I ring you up and suggest that you give us some money to help us out?

GREG HUNT:

No.

TOM ELLIOTT:

Why not?

GREG HUNT:

Because what happened here was the absolute backbone of a region. And more than that, it would've been offline for six to seven months, and in particular there would've been no restarting.

It would've been a permanent impact, it would've destroyed the jobs, and through no fault of the workers, the firm, or anybody else.

TOM ELLIOTT:

Okay, but so again, the new modus operandi is if a company or an employer is a backbone of a region and something bad happens you'll bail it out, but if it's something that you don't perceive to be a backbone you won't bail it out?

GREG HUNT:

I think that this was a unique case, and I think that …

TOM ELLIOTT:

But it's not a unique case, because governments have been bailing out industries for generations. It's not a new thing.

GREG HUNT:

In my judgement, and I was the person who took the case to the cabinet, this was a unique case because it was, (a) such a fundamental part, (b) it was recoverable, and (c) it was recoverable in a way which saves the Commonwealth very significant resources which we can therefore use to protect the taxpayers' money.

The cost to the Commonwealth Government would've been far, far greater if 2000 people had stopped paying tax and 2000 people had required federal support in terms of unemployment benefits.

TOM ELLIOTT:

I see that the money that the Federal Government is giving to Alcoa is actually a loan. Does that mean you're actually expected to be repaid in due course?

GREG HUNT:

No, it's what's called a conditional grant. So we're giving the grant, but we've built in guarantees that they would have to pay 100 per cent back if the plant either dropped below 90 per cent of its long-term production before 1 July 2019, or closed, and then the repayments drop back to zero if it continues through to 1 July 2021.

So it guarantees four and a half years of production, or otherwise there has to be a payment back to the taxpayer, and that gives time for a really long-term viable approach.

But this is all about electricity costs, and we are just fighting to keep electricity prices down, and we're trying to get support from the state and others on that. We're up for that battle …

TOM ELLIOTT:

Well we're hoping to speak to the state Industry Minister later on in the program about that very issue.

Okay, so you've bought four more years it would seem, or four and a half years until July 2021. Is that what's really happened here, we've bought some time through to after the next election? Or do you think after that something else will happen that will keep Alcoa going here?

GREG HUNT:

So I met with the global head of Alcoa, Roy Harvey, in New York. I went with Wade Noonan, the state minister, and we just worked hand in glove.

And I think as people desperately hope, you know, Liberal and Labor, federal and state do, it doesn't happen enough but this was a good example.

And their view was that if they can get through this period now, and we fought not for a three year, but for a four and a half year contract, if they can get through that it gives the chance to create a power option that is a real long-term, multi-decade outcome.

I can't guarantee that, but I can guarantee that we've created the conditions where we can have a real go at it, and I think in the end that's good for Victoria.

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